Top executives from two of the biggest US health insurers defended mergers that will consolidate the industry from five major companies to three at a Senate hearing to examine antitrust issues.
Anthem Inc. chief executive Joseph Swedish and Aetna Inc. chief executive Mark Bertolini told lawmakers that consolidation benefits consumers and strengthens companies, that the deals are necessary to succeed in a changing health-care landscape, and that there are many new sources of competition.
“Simply put, the combination of Anthem and Cigna will allow us to provide better health insurance to more people,” Swedish told lawmakers at a hearing Tuesday held by the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights in Washington.
In July, Anthem agreed to acquire Cigna Corp. for about $48 billion and Aetna struck a $35 billion deal for Humana Inc. The deals will be closely scrutinized by lawmakers and regulators, and a group representing US hospitals will say that the transactions are “a blow” to patients and health-care providers that could raise prices for insurance.
Senator Amy Klobuchar of Minnesota, the panel’s top Democrat, said lawmakers need to examine how the mergers will affect consumers and health-care providers. “I want to make sure these deals do not harm consumers by increasing premiums or reducing benefits,” she said.
UnitedHealth Group Inc. is the largest US health insurer, with more than 45 million medical customers and $130 billion in annual revenue. There are also many regional and nonprofit plans, and recent venture capital-backed startups like Oscar Health Insurance.
Aetna’s purchase of Humana would help it expand in Medicare Advantage, the US’s privately run version of the health insurance program for people 65 and older. Bertolini, in his written remarks, said “robust choice and competition” would remain in the program and that government profit limits and other regulations would prevent the combined firm from harming consumers.
The American Hospital Association and the American Medical Association have said the mergers will hurt patients by reducing competition and raising prices. The AMA, which represents physicians, said earlier this month that the deals would reduce competition in 154 metropolitan areas, potentially causing premiums to go up and decreasing payments to doctors.
The deals could “be a blow to millions of health care consumers, as well as the hospitals, doctors and others who are working to improve quality and efficiency while making care more affordable,” hospital association chief executive Rick Pollack said in written remarks. “The unprecedented level of consolidation these deals threaten could make health insurance more expensive and less accessible for consumers.”
Pollack said the government shouldn’t sign off on the transactions unless it can be assured they won’t reduce competition or hurt consumers.
Assistant Attorney General William Baer, who leads the Justice Department’s antitrust division, has said he will assess the industry as a whole to make sure competition is preserved and the mergers don’t lead to higher costs. In past deals, health insurers have had to divest operations in specific geographic areas to maintain competition.